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All Is Fine in Canada

With the collapse of the U.S. banking system and no bank failures in Canada, many people are asking why the Canadian banks did better than their neighbors in the United States.

Our banks did better because they refused to blindly follow the U.S. banks in sub-prime lending business in which greedy bankers persuaded people to borrow money that they could not repay.

In fact, the Great Recession has exposed many myths about the U.S. economic model. A number of so-called advantages of America’s “dynamism” are fantastical. Those who think there is a more vibrant small business culture in the United States than in Europe, for example, tend to ignore the fact that America is at the bottom of the list of rich countries in the percentage of population that is self-employed. In fact, with millions of Americans facing home foreclosures, America appears to be the most downwardly mobile society in the world.

The idea that the United States is more “internationally competitive” than other wealthy countries has been without foundation for decades as measured by the most obvious indicator — massive U.S. trade deficits with other nations, especially with Japan, China and Canada. And, of course, the less regulated and more “market-friendly,” U.S. financial system — widely held up by many experts — collapsed in the latest crisis.

Thankfully, Canadian bankers refused to follow in the footsteps of incompetent American bankers. As long as they keep their distance from the failed American model, everything will be fine in Canada.